Namibia is at a desperate juncture in its economic development for the introduction of a diversification strategy as the country cannot rely indefinitely on its natural resources and volatile commodity prices for growth.
This is the view of finance minister Iipumbu Shiimi, who on Monday evening dissected the diversification strategy on national television along with Nangula Uaandja from the Namibian Investment Promotion and Development Board (NIPDB) and Obeth Kandjoze, Director General of the National Planning Commission (NPC).
Shiimi stated that economic growth in Namibia has historically been driven by commodities. However, this strategy has not been creating the desired number of jobs as the extractive industry is quite capital-intensive, he said in remarks during the Talk of the Nation programme on the Namibian Broadcasting Corporation (NBC).
The finance minister said Namibia needs to move to new industries that will cater for economic activities, and more importantly to tackle the country’s persistent inequality through quality jobs and revenue growth for government.
“Namibia registered impressive growth till 2015, where the economy registered on average about 5% of growth every year. In 2016, growth came to a standstill mainly because the commodity super-cycle came to an end, where Namibia was benefiting a lot from high commodity prices on international markets,” Shiimi observed.
Furthermore, the Harvard Growth Lab at the Centre for International Development is working to understand the dynamics of economic growth, and to translate those insights into more effective policymaking in developing countries. Namibia has collected 50 years of information and evidence to understand how countries have successfully and sustainably diversified their economies.
Shiimi noted that it was evident that those countries who successfully diversified produce a wide range of products, and continue to build on the production and marketing of these products.
“You will only be able to diversify by building on the knowledge you have. Part of diversification is to see what type of additional skills you need to import and support skills already existing in the country,” the politician outlined.
At the same occasion, NIPDB CEO Uaandja said the board’s plan for the diversification strategy is to provide private-led growth. The implementation of the identified products will not only be produced by the public sector, but most will be from the private sector through consultations with the Namibia Chamber of Commerce and Industry (NCCI).
She revealed that the diversification strategy identified 97 products to produce or to add value to as these have the potential to drive economic growth.
“The kick-off will be to engage players in different sectors. The board and ministry of trade will work with the private sector, and find out who the current players are and what challenges they are facing,” Uaandja added.
In identifying sectors, the NIPDB will be looking at growth potential, possible productivity and employment increases, how much foreign investment a sector has attracted, and the inclusion of local investment.
Meanwhile, the 97 products have been split into five categories, namely chemicals, food, mechanicals, items related to minerals as well as transport and logistics.
On his part, the NPC’s Kandjoze said on the back of a struggling economy, they had to look at the next best steps to unlock economic structures as well as to identify pitfalls that contributed to the current economic and investment climate.
“In doing so, we understand there is a complexity tool analysis capability to unpack the range of products,” he stated.
Kandjoze added that from 15 May 2020 to 15 May 2021, there was a study conducted to investigate the diagnostics of the Namibian economy, and what could be done to improve productivity.
“In that part, we looked at the policy framework, which gave us an understanding of the productive sectors. Problems identified are that there is no wide range of products to produce revenue, and the uncertainty in policy framework,” he indicated.
The NPC DG said through the diversification strategy, Namibia must be able to identify new engines of growth. This, he reasoned, would be achieved by identifying high-potential opportunities and to link them to policy frameworks of how sustainable they will be, how much work they will provide, and what quality jobs they will create.